It has been reported1 that the US rock band, Foo Fighters, have recently issued proceedings against several Lloyd’s Syndicates in the US District Court in California, for failing to pay claims arising from cancellations of their European shows on their Sonic Highways World Tour.
The band purchased a terrorism policy and a contingency policy from several Lloyd’s Syndicates which would have covered lost earnings had shows been cancelled, and any costs arising from the cancellations. They claimed for four shows cancelled in Turin, Paris, Lyon and Barcelona under the terrorism policy following the Paris terror attacks, and three shows in the UK under the contingency policy after the lead singer, Dave Grohl, broke his leg. The potential losses were significantly mitigated as Dave Grohl continued to play shows whilst recovering from his broken leg. The band also brought claims against their insurance brokers, Robertson Taylor, for not acting in their interests.
Contingency insurance typically covers circumstances arising from perils of death, injury or illness of the named artists, and venue destruction. Cancellations of such high profile shows can lead to losses in the millions including lost performance fees, travel and accommodation expenses, crew salaries and public relations and marketing expenses. This case, which is still ongoing, focuses on the anticipated coverage arguments, in particular whether insurers are correct to re-characterise the shows in the UK as “rescheduled” instead of cancelled which has been used as a means of denying cover.
It is not uncommon for coverage issues to arise; however, high profile disputes at Lloyd’s have been less visible due to the current soft market, with the majority of matters reportedly settled on a commercial basis in the interest of protecting underwriters’ future business. One issue identified in the complaint is how claims were handled and, in particular, the delay in claims payments. It is not uncommon in the Lloyd’s market for an insured to experience delays in receiving claims payments from insurers. However, it is likely that with the introduction of the Enterprise Act 2016 from next May, the new obligations on insurers (where policies are subject to English law) will reduce unreasonable delays because insurers will be exposed to claims for damages for late payment in addition to the insurance claim.